Speaker: Professor Janette Webb # The University of Edinburgh
25th Feb 2013
15:00 - 16:30
Seminar Room, Old Surgeons' Hall
Urban heat networks are established components of energy systems in several European countries, where they contribute to resource efficiency, carbon savings, affordable heat and urban regeneration. District heating (DH) serves only around 1% of UK demand, but recent energy policy has again positioned heat networks as part of a resilient low carbon energy system. This seminar examines the prospects for DH in UK cities, in the context of globalised energy and financial markets.
Privatised energy markets, which have developed alongside finance capitalism over the last 20-30 years, have decisively shaped the political-economic circumstances for such innovation. With the aim of assuring reliable rates of return through controlling risk, and hence lowering the cost of capital, financial market actors have standardised risk assessment to govern investments. In seeking to reduce financial risk, such instruments decontextualise and delocalise investment decisions. Local energy systems, which do not fit dominant system ‘templates’ are marked out as riskier, making a ‘business case’ for infrastructure investment hard to establish. Given the local and contingent qualities of DHC, with high upfront investment, long-term payback, and risks regarded as hard to mitigate through standard means, the resulting increase in capital costs limits the financial viability of projects. Bridging the gap between rationalised finance models and local political and economic interests in DE projects requires considerable governance capacity, and has high transaction costs. Inter-organisational governance of the kind entailed in DHC systems is prone to recurring crises over management complexities, organizational risks, power struggles, and cultural tensions. In spite of the maturity of DHC technologies therefore, and some supportive UK and Scottish policy, deployment represents a significant collective action problem. Despite the difficulties, leading municipal authorities are actively developing projects. Using new qualitative data, the seminar examines the local governance solutions, and the prospects for effective governance of UK urban heat and cooling networks.
Janette Webb is Principal Investigator of the RCUK-funded Heat and the City project, which focuses on urban energy governance and business organisation, and the connection between city-scale low carbon energy projects, and global energy and financial markets. She is also a Member of the Scottish Government Expert Commission on District Heating, and a Trustee of the environmental charity SNIFFER.